1.5% inflation = interest rate rise??

The latest RBA meeting on the 6th of October has signalled the end of what Glenn Stevens has called a 'mild downturn'. After holding interest rates at 3% for 12 months the cash rate has now started heading up (though only slightly ) after the RBA decided to put them at 3.25% on Tuesday.
After Lehman Bros in the U.S filed for bankruptcy in Sept 2008 the RBA cut the cash rate by 4.25% over a 6 month period in a bid to prevent major credit and AD issues in Australia.
Thus the signal that Australia's downturn is possibly over has been given by the RBA. If you want to read why G.Stevens believes Australia avoided the major problems experienced in the G7 in particular then read this concise summary.
The question remains- Is Australia out of the recession? and why is the cash rate rising when inflation is still below the 2-3% target range?
Wll the answer is a pre emptive strike, a move to curb excess borrowing at a low rate of interest and to send the market a signal.
Of note is that unemployment has fallen very slightly from 5.8% to 5.7% which is a further indication of a return to expansionary conditions. What will be interesting is that Glenn Stevens also said "a degree of policy discipline will be needed". This means that he expects fiscal policy will also slow down its expansionary phase and that spending will decrease- however will this happen in light of the fact that the next Budget leads up to the next election?
It will be interesting to see what the ALP does??

Economics of climate change

The Stern review is the most comprehensive economic based report into the impacts of climate change, it also explores possible actions which need to be taken and the consequences of taking no action. Lord Stern is British economist.

The Stern Review states "our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century. And it will be difficult or impossible to reverse these changes."

One of the considerations of climate change action by Stern is that developing nations should have the opportunity to reach the same level of living standards as developed nations.

Stern recently updated his report to say that 2% of GDP needs to be invested to avoid the worst impacts of climate change.

Stern Review

Check out this SlideShare Presentation:

Stern Review

Investigation into medical devices

A good example of the ability of self regulation to control its own behaviour has been llustrated via a recent investigation into medical devices. Trips to Germany, payment for a polo festival, doctors flown to the airport in a helicopter to avoid peak hour traffic and extraordinarily large consultancy fees. All of these behaviours have been found to exist in Australia as the pharmaceutical companies attempt to influence the purchase and supply of medical devices to patients/ consumers. Whilst the regulation of the goods themselves is controlled by the Therapeutic Goods Administration (TGAct 1989 and recent Therapeutic Goods Am (Medical Devices) 2002 the adverse situations which occur need to be reported by the supplier . The figures below show the increase in injuries and casts questions on this self regulated system.

Medical devices include a wide range of products such as medical gloves, bandages, syringes, condoms, contact lenses, in vitro diagnostic devices, disinfectants, X-ray equipment, surgical lasers, pacemakers, dialysis equipment, baby incubators, heart valves. Some of these are actually placed inside a patient and most would be reluctant to challenge a doctor about the brand specified of a pacemaker. To read the articles see the following links
Drug Mone hurts our credibility 7th Sept 09
Meals, trips used to sway choice of devices 7th Sept '09
Kicbacks, kickoffs at World Cup 8th Sept'09

The most telling criticism is to the SMH from a doctor.

Regulation needed to make device advice transparent

News that the medical devices industry is paying millions to doctors for entertainment and ''consultancy'' fees should come as no surprise, given we have heard it all before with the pharmaceutical industry (''Meals, trips and transport used to sway doctors over implants'', September 7). The latter industry self-regulates via a code with holes in it that one could drive a semitrailer through.

Both the pharmaceutical and devices industries have a duty to do everything they can within the law to make a profit for their shareholders. They do it through influencing doctors. We doctors are human and, like everyone else, we are influenced by marketing and money. The effect is that taxpayers pay for drugs and devices that at best are the most expensive choices and at worst lead to unnecessary deaths.

When will the Federal Government step in to regulate this dangerous and inefficient system?

Tim Woodruff President, Doctors Reform Society, Richmond (Vic)

Supply is important for the long term

Whilst supply side economics has taken a temporary back seat at present it will need to return in importance for Australia to shake off the underlying issues that existed prior to the recession. That is the recession we didn't have, although we are still in it. The issues of competition, low savings, underlying inflation due to skills shortage, infrastructure and a appreciation in the $A all will serve to lower our international competitiveness.
Sidenote why is the $A about to appreciate? Well the financial markets are already predicting that by the end of the year our interest rates will have risen by 0.5 and a further 1.0 next year to slow inflation. If you compare our interest rates to the rest of the world there is already a major differential. This means that if our cash rate moves first it will attract investors and speculators, leading to lower returns for our exporters.

So as Gittins has pointed out recently in PM won't be a great leader the Rudd government needs to make some hard decisions and why not now? Politically there is no serious competition and secondly the time is ripe when the economy is in the need of injections. The article points out 5 areas that Rudd has already considered; competition, innovation, skills, infrastructure and tax reform. There is debate whether all of these involve micro reform however there is a need for change.
In light of this as Henderson (Rudd will need reform for recovery) points out that flexibility is key to future growth. It is of particular interest to compare this article to Gittins' No such thing as a free market. to see a contrasting view regarding the direction of labour and financial regulation.
Which one do you believe is the direction Australia should take? It would be great to see some responses to hear your thoughts???

p.s if you are after some more reading on micro policy and another viewpoint check out Mr. Woods (VCE link to your right) in Topic 4- micro and Topic 3- Allocation of resources.

Arrg help me with Economics

This will not provide the answers to the Eco trial. However if you are not sure how to explain a concept or want it explained in another way you should investigate Mr. Wood. This web site may provide you with some additional confidence. If you go to his site which is actually set up for the VCE or Victorian equivalent of the HSC it has some great information, history and analysis.
Unit 1 is intro and yr 11 work
Unit 2 is globalisation and trade policy.
Unit 3 is economic issues.
and Unit 4 is the role of government and government policies.

If you choose say Issues- External Stability and then go to the bottom of the page it then goes through page 1 definitions, 2- Measurement, 3- Terms of Trade, 4- Measurement limitations, 5- recent Aus performance, 6&7- demand factors, 8&9- supply factors, 10- policy approach, 11- International comparisons.

Another point of note is that the statistics button shows graphs and history of the important economic indicators with explanations. If you are after the very latest figures the best site is the Reserve Bank which has the cash rate, inflation and latest exchange rates on the front page if you after more than this then go to the chart pack and investigate further.

Lastly as I mentioned the other day a good source of updated info for your case study is the Economist web site- go to the Country briefings on the left and then all country briefings- it has sepcial links to the BRIC nations but up to date on many, many others.

Good luck.

Plea Bargaining - reform of vicitms' rights

A discussion has resurfaced regarding the balance of rights of the victim versus the offender's rights to defend themselves in a court of law. At present the 1996 Vicitms Rights' Act has a charter of rights to protect victims. This can be read in full on the Austlii site, with the charter setting out that a victim should be kept informed about bail, release of the offender that they be given support to present a victim impact statement and that they can be relieved from attending preliminary and committal hearings.
However one case in particular has given the impetus for future reform. A woman survived a brutal atatck from an ex partner who had stalked her for several years. He savaged her face with a knife and left her with brain damage to then be charged with attempted murder. The charge was reduced from attempted murder to malicious injury with intent despite her not being informed about this change in the charge. All reference to the knife had been removed from the trial- this difference being 25 yearsfor attempted murder to the standard period of 7 years. For further reading on this case see "Forced to take on the system" .
Thus with this in the background the Sentencing Council which is one of the key agencies of reform has been instructed to begin a paper on plea bargaining.

This is good information regarding the process of reform, the nature of society changing and rights of victims'.